LUFTHANSA Sets Its Focus On Alitalia But Should Expect Disappointment

LUFTHANSA Sets Its Focus On Alitalia But Should Expect Disappointment

In what was basically a poorly kept secret until just a few days ago when Carsten Spohr suggested that Lufthansa would be interested in Alitalia, Lufthansa today confirmed it has submitted its proposal.

In it, Lufthansa is offering upwards of 500mm Euro to buy  Alitalia out of bankruptcy.   The 500mm offer is asking for all of Alitalia’s aircraft, employees and airport slots around the world.   However, LH said it would have to let 6,000 of the 12,000 Alitalia employees go should it be successful in acquiring the Italian national carrier.

Will it happen?   Most likely not.

Though at first blush the LH offer is compelling and agrees to take on all of Altalia which is something that the Italians want to happen vs. Alitalia being blown up into bits and acquired by multiple suitors, it is expected that the group handling the administration of Alitalia will decline the bid.   That has been made obvious by the fact that a November 5, 2017 deadline set by Rome to find a suitor for Alitalia has been extended to April 30, 2018.   This extension does not inspire confidence that Lufthansa’s bid is being taken seriously.

I believe the proposal will fall on deaf ears in Rome since it suggests that 6000 Alitalia employees will lose their jobs, and with the Italian Gov’t in control of the sale such a deal would be bad politics considering that Italy itself is in a state of flux with its ruling parties and can ill afford to upset their constituency.  The proposal also suggests that short and medium haul routes would be gutted from the timetable.

Speaking of politics, there is no love loss whatsoever between Rome and Berlin thanks to the EU’s (primarily Germany) handling of most things on the continent.   The migrant crisis is front and center in Rome and Italy feels it is being asked (unfairly) to bear the burden of Merkel & Company’s failed experiment, but I digress.   So it would most likely pain Italy and Italians to see Germany of all countries (or an agent of it) come in to try and rescue Alitalia.   As the say goes, “thanks but no thanks”.   Italians are a prideful people and this just doesn’t seem like something they will sign off on.

In addition to the Lufthansa offer, EasyJet has also submitted a bid demonstrating its interest.  However their bid is asking for only parts of Alitalia and as I mentioned earlier, Rome wants this to be an ‘all or none’ deal.   There are also 3 to 4 private equity firms that have expressed interest in Alitalia but their details have not been made very obvious as yet.

While the process of finding a buyer continues, Rome has agreed to throw good money after bad and has announced that it has given Alitalia another 300mm Euro to continue operations.   This after the Italian government floated Alitalia a 600mm Euro loan earlier this year to help finance the debacle.   I’m sure that Italians are pleased that they’ve spent nearly 1 Billion Euro just this year alone to keep the birds in the air.

Apparently there’s no end in sight to this soap opera…..


LUFTHANSA Completes Purchase Of Significant Air Berlin Assets, Alitalia Next?

LUFTHANSA Completes Purchase Of Significant Air Berlin Assets, Alitalia Next?

Lufthansa yesterday closed on a transaction that allowed it to acquire 20 Air Berlin aircraft, Air Berlin’s ‘NIKI’ subsidiary as well as AB’s LG Walter operations.    The deal amounted to $210 million Euro (approx. $250mm USD).

In return, Lufthansa agreed to protect all jobs that were affected specifically by this deal.   In other words, LGW and NIKI employees do not need to fear for their jobs.

In his comments, LH Boss Carsten Spohr indicated that Lufthansa would infuse over $1 Billion Euro into the Air Berlin acquisitions which will cover updates and upgrades to the aircraft, as well as future aircraft acquisitions for LH’s LCC Eurowings, which is where all the Air Berlin assets will be assigned to going forward.

Several large parts of Air Berlin have yet to be sold.  It appears that Easy Jet and Thomas Cook / Condor will also benefit from the liquidation of Air Berlin, though no specific deals have been announced.   Ryanair has apparently been blocked out of any chance to benefit from the Air Berlin garage sale.

During this recent shopping spree, Spohr also suggested that Lufthansa would very much be interested in Alitalia.  Though he firmly denied any interest in acquiring the struggling carrier in it’s current form (which is basically as bad as Air Berlin’s condition), he did suggest that Lufthansa would be very interested in helping the Italian gov’t create a ‘New’ Alitalia. I thinking ‘Lufthalia’??

 


 

LUFTHANSA Announces Resumption Of Service To Certain USA and Asia Destinations

LUFTHANSA Announces Resumption Of Service To Certain USA and Asia Destinations

While away for the last 2 weeks, Lufthansa released information concerning their Winter 2017/18 timetable.   Their updates reflect the resumption of 2 routes to the USA as well as 1 to Asia.

Perhaps the most important announcement involved the resumption of service between Berlin (Tegel) and New York (JFK) as a result of Lufthansa’s takeover of certain Air Berlin routes.   Beginning November 8, LH will fly between TXL and JFK 5 times per week (Daily except for Friday and Sunday).   The last time that LH flew this route was back in 2001.

Flight LH406 will depart Berlin Tegel at 5:35p, arriving in JFK at 8:35p while flight LH407 will depart JFK at 10:20p, arriving in Berlin at 12:15p the next day.

In addition, LH has also announced the following resumptions of service between Dusseldorf and Miami.  Beginning November 8, 2017 LH will fly the route 3x/week, on Mondays, Wednesdays, Fridays.

Turning to Asia,  Lufthansa announced that it will resume flights between Frankfurt and Shenyang, China effective March 26, 2018.    The route will be flown 3x/week, on Tuesdays, Thursdays, Saturdays from Frankfurt.